Two-Dimensional Mechanism Design and Implementability by an Indirect Mechanism ()
ABSTRACT
This paper studies the problem on two-dimensional
mechanism design where the buyer’s taste and budget are his private
information. The paper investigates the problem by the method of
dimension-reduction, i.e., by
focusing only on the buyer’s budget and constructing an indirect mechanism:
function of one variable, the buyer’s budget. It is an approach quite antipodal
to that by Kojima [1] where he focused on the
buyer’s taste instead of his budget. It is shown that the seller does not lose any
money by adopting the indirect mechanism of this paper. In other words, the
seller’s revenue-maximizing direct mechanism is implemented by such an indirect
mechanism
Share and Cite:
Kojima, N. (2017) Two-Dimensional Mechanism Design and Implementability by an Indirect Mechanism.
Theoretical Economics Letters,
7, 1595-1601. doi:
10.4236/tel.2017.76107.
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